Investing in Real Estate With Your IRA


Are you concerned about having your retirement IRA funds tied up in investments that cannot keep up with the current rate of inflation? If so, one way you could net the highest return is by investing in real estate with your IRA.  

Below we will detail the options available to you, giving you an idea of how to operate these investment accounts and the various strengths and weaknesses of each selection. Understanding these approaches will provide you with the opportunity to grow your nest egg.

Strategies for Investing in Real Estate With Your IRA

An Individual Retirement Account is a tax-advantaged program that bolsters retirement funds through saving or putting money to work in investments. Though the name might sound like it’s an option only available to those in a certain age or tax bracket, any individual who has earned taxable income through a verified employer can open an IRA.  

While it can feel daunting to understand how to put your IRA to work investing in real estate, there are numerous sub-categories that combat the market fluctuations and inflation that traditional accounts are prone to. 

Self-Directed IRA

A Self-Directed IRA (SDIRA) is an individual IRA administered by a custodian but directly managed by the account holder. That is why the IRA is identified as self-directed. The critical difference between a standard IRA and an SDIRA is the types of assets you’re allowed to obtain and hold in your account. A traditional IRA permits investments in mutual/index funds, stocks, and bonds, but a self-directed IRA opens up the option of investing in real estate and alternative assets, such as precious metals and cryptocurrency. 

To get started, you will need an IRA Custodian. This is an intermediary entity that accepts or offers investments at your request and manages such transactions, ensures financial reporting is completed/filed in accordance with applicable IRS parameters, and completes any paperwork.  However, these are the limits of the custodian’s duties; they will not advise on how to arrange your holdings.  

While most markets fluctuate, investing in real estate with your IRA has historically been shown to appreciate portfolio values more than any other sector. A particular opportunity to accelerate growth on returns is leveraging the property, allowing you to put a small down payment with the rest borrowed via a mortgage. Additionally, any rental income you collect grows tax-free within the IRA and your rental income multiplies in your SDIRA. You are not taxed until you withdraw funds from the IRA, which can be managed.  


  • Tax-free passive Income via rental fees
  • Long-term SDIRA structure synergizes with real estate appreciation¬†
  • Diversifies and protects portfolio from market fluctuations¬†


  • Maintenance/repairs paid from IRA¬†
  • Custodian fees with no advisory role¬†
  • Cannot live on property or claim usual real estate deduction on federal tax


REIT Share-Buying 

Another option for investing in real estate with your IRA is a Real Estate Investment Trust (REIT). For many people taking on the personal risk of studying marketplace and property trends can lead some to take a more hands-off approach. REITs allow individuals to invest in real estate with their IRA by purchasing shares of a real estate venture that is totally operated and owned by a selected company. This allows you to still diversify your portfolio with real estate without having to take on the risk of understanding the real estate market and future trends. Leave this to a real estate expert who does this for a living. 

REITs fall into two broad categories: Mortgage and Equity. The first, is the most hands-off, allowing you to invest in mortgages that then go into property investment. The second category allows for investing in more specific properties that aren’t usually accessible to individual investors; healthcare, hotels, etc. The largest benefit of both is the increased liquidity of buying and selling your shares as opposed to selling a property for an SDIRA.  


However, with REITs being backed by the SEC and NASDAQ, they are hypersensitive to interest rate changes. With dividends taxed on income, yields could be high but a dip can be more costly.  


  • Steady return(s)¬†¬†
  • Managed professionally¬†
  • Increased liquidity¬†


  • Limited Growth
  • Interest rate sensitivity¬†
  • Market trend vulnerability¬†

Solution – Consult Professional Resources

Between taking on too much risk and too little, the best option can be consulting a money management firm. This can help to demystify and strategize with you on your SDIRA. While there are many ways to get ahead of the inflation we’re experiencing, investing in real estate with your IRA can be a game-changer. It’s essential to get started as soon as possible so your investments have as much time as possible to grow.  

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